This article discusses Republic Act 11337, the law that supports startup companies and business in the Philippines.
There is a law that supports startup companies and business in the Philippines. Legislated under Republic Act 11337, the aim of the Innovative Startup Act is to provide incentives and remove constraints aimed at encouraging the establishment and operation of innovative new businesses, businesses crucial to their growth and expansion, and to strengthen, promote, and develop an ecosystem of businesses and government and nongovernment institutions that foster an innovative entrepreneurial culture in the Philippines.
The Innovative Startup Act creates a legal and practical framework for supporting startup enterprises and businesses which are covered within the act. By definition, Republic Act 11337 defines a startup as any person or registered entity in the Philippines which aims to develop an innovative product, process or business model. The law also defines what innovation is (the creation of new ideas the results to the development of new or improved products, processes or services, and also what it considers to be an innovative product (a good or service that is new or significantly improved, such as improvements in technical specifications, component materials, software in the product, user friendliness or other functional characteristics), innovative process (a new or significantly improved production or delivery method through changes in techniques, equipment and/or software), and innovative business model (a new organizational method in business practices, workplace organization or external relations).
If the enterprise or business would fit in one or more of these parameters, the startups and startup enablers would be entitled to a host of programs, benefits, and incentives that the Philippine governments, local government units, and other institutions in partnership with any national government agency. The national government agencies tasked to implement the Innovative Startup Act include the Department of Science and Technology, the Department of Information and Communications Technology, and the Department of Trade and Industry.
Some of the Benefits and Incentives of Innovative Startups
The Innovative Startup Act provides the following benefits to startups:
a. Registration of a startup as an enterprise and as a business entity, with the Department of Trade and Industry (DTI), with full or partial subsidy for the registration and cost in the application and processing of permits and certificates required for the business registration and operation of an enterprise with the appropriate local or national government agencies.
b. The startups would also be endorsed by the government for expedited or prioritized processing of applications.
c. Aside from registration subsidies, the innovative startup may receive full or partial subsidies for use of facilities, office space, equipment and access to services provided by the government or partner institutions.
d. Grants for research, development, training and expansion are also may also be provided for qualified startups.
Republic Act 11337 mandates the Department of Foreign Affairs to create startup visas, in the following categories:
(a) Startup owner visa – for prospective or current foreign owner of startup or startup enabler registered in the Philippines;
(b) Startup employee visa – for foreign employee of a startup or startup enabler registered in the Philippines; and
(c) Startup investor visa – for prospective or current foreign investor of a startup or startup enabler registered in the Philippines.
(d) Multiple-entry interim startup visas – valid for six (6) months to one (1) year shall be issued for free to prospective startup owners, investors, or enablers upon the endorsement of the appropriate host agency.
These visas are special, such that bearers of these visas are exempt from securing Alien Employment Permits from the Department of Labor and Employment. An Alien Employment Permit is a legal requirement which foreigners must secure prior to holding employment or any corporate positions in companies. Additionally, Filipino executives of qualified startups are said to be eligible to apply for an APEC Business Travel Card. Member-countries of APEC give recognition to APEC Business Travel Card holders, allowing them special lines for immigration, and in certain instances, special visas which are obtained upon entry to the APEC member-country.
Ease of Doing Business for Startups
Indeed, qualified startups will benefit from the Innovative Startup Act. The aims of Republic Act 11337 are to provide incentives and remove constraints aimed at encouraging the establishment and operation of innovative new businesses, businesses crucial to their growth and expansion, and to strengthen, promote, and develop an ecosystem of businesses and government and nongovernment institutions that foster an innovative entrepreneurial culture in the Philippines. These goals are truly met. The provisions of the law support these goals, and send a clear message to startups and innovators all over the world and that it is indeed better to do business in the Philippines.
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